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S. 256. Bankruptcy/Vote on Amendment to Exclude from Key Provision of S. 256, a Republican-Sponsored Bill to Alter Federal Bankruptcy Rules, Income Earned by a Debtor Within the Six-Month Period Leading Up to the Filing for Bankruptcy If the Debtor Was Laid Off or Could No Longer Engage in That Activity Due to a Medical Disability.

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S. 256. Bankruptcy/Vote on Amendment to Exclude from Key Provision of S. 256, a Republican-Sponsored Bill to Alter Federal Bankruptcy Rules, Income Earned by a Debtor Within the Six-Month Period Leading Up to the Filing for Bankruptcy If the Debtor Was Laid Off or Could No Longer Engage in That Activity Due to a Medical Disability.

In this vote, the Senate defeated an amendment offered by Edward Kennedy (D-MA) to S. 256 that would have excluded from a key provision of the bill any income earned by a debtor during the six months leading up to his or her bankruptcy filing if that debtor was laid off or could no longer engage in that income-earning activity due to a medical disability. S. 256 was a Republican-sponsored bill to alter federal bankruptcy rules. On behalf of Progressives, Kennedy argued that the increased outsourcing of jobs in America and the growing number of temporary workers who work without benefits such as health insurance has led to an increase in the number of workers who find themselves having to file for bankruptcy through no fault of their own. These people, he reasoned, ought not to have the income they receive in the six months immediately prior to their bankruptcy filing counted as income for purposes of determining if they meet the harsh "means test" established in the bill. (S. 256 would establish as part of the bankruptcy process a "means test" based on the median incomes of individual states. Individuals who are determined to have sufficient means-assets-would be ordered to repay all debts, while those deemed to have insufficient means would have their debts erased after certain assets are seized.) It would be "unfair, unjust and discriminatory," he reasoned, to include those funds as a measure of their income when they no longer had the ability to earn them. Kennedy's amendment was one of a series offered by Progressives to limit the bill's scope because they viewed S. 256 as benefiting large corporations, such as credit card companies, at the expense of middle and lower-class Americans. They maintained that S. 256 would actually require individuals who deserve full protection in bankruptcy to overcome additional barriers to getting out of debt, like higher attorneys' fees and more paperwork. Republicans countered that the bill would make it harder for those who could pay their debts to escape them. In addition, Republicans were anxious to keep the bill "clean," meaning free from most amendments, because the House had already indicated it would not accept a bankruptcy bill laden with amendment language. Progressives' loss in this amendment by a vote of 41 to 58 meant that language remained in the bill that would allow some income that a debtor could no longer earn to be included in the determination of whether or not that debtor met the bill's means test.